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Russia’s Raiffeisenbank: results from the retail lending online conference

  • Over the long term, retail lending rates in Russia are expected to decline due to the maturing economy and development in the banking system.
  • Rising sales of residential space on the primary market will be the main driver of growth in the mortgage market in the nearest future.
  • Average consumer loan rates will rise through the end of the year, and growth in consumer loans will stabilise at 17-20% next year.
  • In a fierce competition for customers, banks are focusing on quick and accessible loans, resulting in active market growth.
  • Annual growth in the mortgage market will reach at least 20% in 3 years.

An online conference headlined Burning Issues in Russias Lending Market was held on ZAO Raiffeisenbanks Web site. Alexey Kapustin, Head of Retail Products and Customer Relations, and Alexey Popovich, Deputy Head of Secured Credit Development, answered questions.

According to Raiffeisenbank estimates, consumer loan rates will rise. We expect that average rates will be likely to increase gradually until the end of the year. This generally reflects the regulatory policy to restrict consumer loan growth. According to our estimates, growth in consumer lending will stabilise at 17-20% next year, said Alexey Kapustin.

When commenting on the development of retail lending and the increase in customer debt load, Alexey Kapustin noted that over the long-term retail lending rates in Russia will decline. In his opinion, this decline will be conditioned by two important trends: firstly, rouble market rates will decline in a maturing economy, and secondly, development in the banking system will allow retail banks to know their customers better and, consequently, offer lower rates. In Russia, a large share of customers who do not borrow remains. For example, according to our surveys, only 20% of the adult population in Russia took out consumer loans in the past 12 months.

On average, not only consumer lending, but mortgage lending is increasing. The demand for mortgage lending in our country will exhibit sustainable growth. Comparing this year with last, the market dynamic is less intensive; however, people are still interested in buying homes. According to both research firm and ratings agency estimates, in 3 years growth in the mortgage market should reach 20% annually," said Alexey Popovich.

With a general trend toward growing demand for mortgages, a notable increase in foreign currency mortgage offers among banks, according to Alexey Popovich, is not connected with growing demand: the demand for foreign currency loans is now minimal  about 1-2% of the total number of applications. However, he explains that currency mortgage offers are increasing due to the interest from customers whose salaries depend on currency exchange rates.

Commenting on reasons for the increase in mortgage lending on the primary market, Popovich said that the government is interested in boosting the domestic construction industry, which is why most governmental programmes are aimed at supporting mortgage lending in the new construction segment. The share of mortgage-based sales on the primary market is much higher than on the secondary market, reaching 50-60% of total developer sales, he added.

During the online conference, journalists asked more than 50 questions, and more than 30 media partners supported the event.

For the text of the online conference Burning Issues in Russias Lending Market please visit ZAO Raiffeisenbanks official Web site.

ZAO Raiffeisenbank is a subsidiary of Raiffeisen Bank International AG. Raiffeisenbank ranks 11th among the Russian banks in terms of assets, based on H1 2013 results (Interfax-CEA). According to the same Interfax-CEA data, ZAO Raiffeisenbank ranked 5th in terms of liabilities of individuals and 10th with regard to consumer lending.

Raiffeisen Bank International AG (RBI) regards both Austria, where it is a leading corporate and investment bank, and Central and Eastern Europe (CEE) as its home market. In CEE, RBI operates an extensive network of subsidiary banks, leasing companies and a range of other specialised financial service providers in 17 markets. RBI is the only Austrian bank with a presence in both the worlds financial centres and in Asia, the groups further geographical area of focus. In total, more than 59,000 employees serve some 14.2 million customers through more than 3,000 business outlets, the great majority of which are located in CEE. Raiffeisen Bank International is a fully-consolidated subsidiary of Raiffeisen Zentralbank Oesterreich AG (RZB). RZB indirectly owns around 78.5 per cent of the common stock, the remainder is in free float. RBIs shares are listed on the Vienna Stock Exchange. RZB is the central institution of the Austrian Raiffeisen Banking Group, the countrys largest banking group, and serves as the group head office of the entire RZB Group, including RBI.


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